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Adolph v. Coastal Auto Sales

May 26, 2010

LAUREN ADOLPH, PLAINTIFF AND RESPONDENT,
v.
COASTAL AUTO SALES, INC., DEFENDANT AND APPELLANT.



Appeal from an order of the Superior Court of Orange County, Luis Rodriguez, Judge. Affirmed. (Super. Ct. No. 30-2008-00107723).

The opinion of the court was delivered by: Ikola, J.

CERTIFIED FOR PUBLICATION

OPINION

Defendant Coastal Auto Sales, Inc., doing business as Norm Reeves Honda Superstore, appeals the court's denial of its petition to compel arbitration.*fn1 We affirm. The court's factual finding that defendant waived its right to arbitrate is supported by substantial evidence. A defendant may not use court proceedings for its own purposes, while remaining uncooperative with a plaintiff's efforts to use those same court proceedings, and then, upon failing to achieve defendant's own objectives in court, and at the time when the parties should be engaged in final trial preparation, demand arbitration for the first time.

FACTUAL AND PROCEDURAL SUMMARY

Plaintiff Lauren Adolph bought a 2003 Honda Civic from defendant and traded in her 1998 Ford Escort toward the down payment. Plaintiff later sued defendant for failing to transfer ownership of the Escort to itself, causing plaintiff to be charged with parking fines, towing and impound fees, and a tax garnishment related to the Escort she no longer owned. On the day before plaintiff filed her original complaint, she served by certified mail a notice of violation of the Consumers Legal Remedies Act (CLRA) (Civ. Code, § 1750 et seq.),*fn2 as required by section 1782, subdivision (a). More than 30 days thereafter, on July 11, 2008, plaintiff filed and served her first amended complaint (FAC). The court sustained with leave to amend defendant's demurrer to plaintiff's FAC. Plaintiff filed a second amended complaint (SAC) that referenced (for the first time) that the Escort had been traded in as part of the down payment on her purchase of the Civic. Defendant's demurrer to the SAC was overruled. Defendant then sought arbitration. The court denied defendant's petition to compel arbitration of the controversy, finding defendant waived its right to arbitrate.

On appeal defendant argues its arbitration right was triggered by the SAC's reference to the purchase agreement for the Civic; defendant asserts it moved for arbitration at its very first opportunity.*fn3 To assess this claim, we summarize plaintiff's allegations in her FAC and her SAC, and describe the discovery efforts undertaken before the court overruled defendant's demurrer to the SAC.

The FAC

In her FAC, plaintiff alleged she "purchased services" from defendant by transferring a 1998 Ford Escort to defendant pursuant to a bill of sale. Defendant agreed to transfer to itself ownership of the Escort and to "take care of all DMV ownership transfer requirements," including "submitting a Notice of Release of Liability to the DMV." Thereafter, on at least seven occasions over a period of three years, plaintiff notified defendant's agents of parking tickets she had received for the Escort after the date of sale, as well as a letter demanding towing and junkyard impound fees, and a tax offset notice threatening garnishment for "monies owed on the 1998 Ford Escort for the outstanding traffic ticket" defendant had promised to take care of. Defendant's agents "admitted it was defendant's fault" and promised to take care of the matter. But as of the date of the FAC, the Escort remained "registered in plaintiff's name."

The FAC contained four causes of action, including a claim under the CLRA. Plaintiff alleged, inter alia, that defendant engaged in an "unfair or deceptive act or practice under" the CLRA by violating section 1770, subdivision (a)(16) (section 1770(a)(16)). Under that subdivision, a "person in a transaction intended to result or which results in the sale or lease of goods or services to any consumer" engages in an "unfair or deceptive" act or practice by "[r]epresenting that the subject of a transaction has been supplied in accordance with a previous representation when it has not." In the FAC, plaintiff alleged that the "subject of [the] transaction [was the] transfer of ownership of the 1998 Ford Escort from plaintiff to defendant, including filing the necessary documents with the DMV to release plaintiff from liability for the car."

Demurrer to the FAC

In August 2008, defendant demurred to the FAC, inter alia, for failure to state a cause of action under section 1770(a)(16), which prohibits a seller from representing "that the subject of a transaction has been supplied in accordance with a previous representation when it has not." Defendant argued that "the subject of the transaction is the subject vehicle," not the "transfer of ownership." The court sustained with leave to amend defendant's demurrer to plaintiff's CLRA cause of action.

The SAC

Plaintiff filed her SAC on October 6, 2008. As relevant here, the SAC was substantially similar to the FAC, but contained changes to paragraph 5 of the general allegations and paragraphs 19 and 20 of the CLRA claim. In paragraph 5 of the SAC plaintiff alleged she "purchased a 2003 Honda Civic Automobile" from defendant, and that, as "part of that purchase transaction, defendant agreed to take in plaintiff's... Escort... and apply its value as a down payment toward the purchase of the 2003 Honda Civic." (In contrast, in paragraph 5 of the FAC plaintiff alleged she "purchased services from" defendant.) In paragraph 19 of the SAC plaintiff alleged that, under section 1770(a)(16), the subject of the transaction was "effecting transfer of ownership of the 1998 Ford Escort from plaintiff to defendant, including obtaining a release of plaintiff from liability for the car, as performance pursuant to the purchase agreement for the 2003 Honda Civic." And in paragraph 20 of the SAC plaintiff alleged that defendant's misrepresentations "in the performance of its agreement were intended to result in the sale of the 2003 Honda Civic to plaintiff." (In contrast, in paragraph 20 of the FAC plaintiff alleged that defendant's misrepresentations "in the performance of ...


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